Using a basic inventory tracker tool can be great when starting out.
But there’s a definite tipping point every business reaches where they just need something more powerful. And trying to stick it out with tired spreadsheets can seriously hold back growth.
Especially when you consider Entrepreneur Magazine’s claim that companies lose 20-30% in revenue each year due to system inefficiencies.
Meaning a standard inventory tracker could be having a direct impact on bottom line for growing retail businesses.
So in this post we cover 11 of the most common telltale signs that it’s time to upgrade to more robust inventory management software.
1) Your inventory tracker causes overselling
Overselling is a nightmare for both retailers and customers.
Not just the fact you’ve made a sale for something that turns out to actually be out of stock. But also the time wasted chasing customers up to resolve the issue.
Check out this email Barnes & Noble sent hundreds of customers after they oversold a HP tablet a few years back:
Yes, customers weren’t charged. But it’s a branding nightmare that surely dented online reviews and repeat business.
And if you don’t have the retail clout of Barnes & Noble then it can be a very steep downward spiral. Especially if overselling is a regular occurrence.
Being able to prevent overselling mainly comes from one thing – better inventory management.
And using manual spreadsheets, free inventory apps or cheap stopgaps just doesn’t cut it for most high growth retailers. Even more so when it comes to selling multi or omnichannel.
It becomes pretty much impossible to manage properly without errors creeping in.
So repeated overselling is a huge sign that whatever’s in use for inventory management simply isn’t working anymore.
2) You manually update stock levels
Most modern retailers sell across more than one channel these days.
But keeping inventory levels updated across all these channels can be a never ending task.
Maybe you sell cell phones on your own ecommerce site as well as on eBay and Amazon.
Keeping track of inventory in a spreadsheet or app and manually updating everywhere each time a new order comes in would be a nightmare. Not to mention the huge risk of overselling if you decide to just do it at the end of each day.
Segregating total stock and dedicating only a proportion to each store is one option:
But there’s a huge downside:
You miss out on sales.
Run out of stock on Amazon and nobody can buy your product there. Even though you potentially still have 100 units sitting in the warehouse if nothing has sold on eBay and your own site.
Juggling things around and constantly updating stock manually is possible.
But it takes up time that could be better used elsewhere (like growing your business). And is a big sign that your current inventory tracker needs an upgrade to something more real-time.
3) You have too much inventory on-hand
Storage costs can be crazy expensive. Your own warehouse, a 3PL service, Amazon FBA – they all come with significant overheads attached.
And so having too much inventory on-hand at any one time is just a major drain on all kinds of resources – cash, time, space and manpower.
You’re also putting more cash than needed into the actual inventory itself. As explained perfectly in a recent post on A Better Lemonade Stand:
So good inventory control results in items spending less time sitting in the warehouse before being sold. Meaning more profit per unit.
It all comes down to knowing:
- Exactly the right time to reorder from suppliers.
- Exactly the right quantity to order each time.
And if your current inventory tracker is making this tough then it’s probably time to consider an update.
4) You have too little inventory on-hand
Stockouts and having too little inventory on-hand is another problem signifying poor inventory tracking.
This is slightly different from overselling in that you haven’t actually received an order for an out of stock item. Rather, items are being listed as out of stock and you’re missing out on the sale in the first place.
And with 70% of shoppers preferring to defect to a competitor rather than wait for backorders, this can be a major drain on your business.
Again, this is a matter of needing better inventory control, management and forecasting.
And if your current solution is repeatedly leaving you with too little inventory on-hand to deal with demand then it’s not doing its job.
5) Inventory checks are near impossible
Carrying out inventory checks or a stock take is something every retailer dreads.
They typically mean closing down the warehouse for a day (or sometimes longer) in order to count every piece of inventory – a necessary, yet time-consuming and monotonous task.
But juggling a basic inventory tracker, multiple sales channels and a multitude of paper inventory lists can be a nightmare as a retail business grows. And if this is a pain point in your company then it could be a sign of outgrowing your current processes.
6) Your inventory tracker has wrong information
Quality inventory and warehouse management means both recorded and actual inventory levels will always be aligned – in real-time.
Pickers arriving at a warehouse location to find that an item isn’t actually in stock can cause major problems. And if you’re finding discrepancies on a regular basis then it could be time for a change.
7) Errors are complicated to correct
If a discrepancy is found then it should be corrected in your inventory tracker immediately.
But this can sometimes cause a cascade of further problems. Particularly if it involves:
- Communicating with various team members.
- Multiple products or product variants.
- And needing to push changes up to several sales channels.
A growing business should be able to react quickly to mistakes. And it could be time to look at inventory trackers that allow updates through some form of mobile scanner or app.
8) You have an ‘all or nothing’ stock level
Some retailers opt for the simplicity of ‘all or nothing’ inventory levels. Where it’s set at 999 on every sales channel before being adjusted to zero the moment stock runs out.
But this just isn’t sustainable in any way – especially if fast growth is the goal. And implementing a more advanced inventory tracking system should be a priority.
“Our inventory would be manually set to either 999 or zero, depending on whether we actually had stock or not for that item. So we had no live figure on any sites and were then taking lots of orders for things that weren’t in stock.”
~ Abby Render
Operations Manager, Indigo Herbs
9) Your reports aren’t insightful enough
Reporting on performance and tracking specific KPIs each month is essential. You can’t grow and improve without knowing how you’re trending or where the work is needed.
And these are exactly the kind of vital statistics your inventory tracker should be giving you.
A spreadsheet can only give so much. Especially when compared to reporting features of a more sophisticated management system:
If the data from whatever you’re using is proving to be not so helpful anymore, it could be time to move on.
10) You’re planning a warehouse upgrade
Moving into a larger warehouse (or even into your first dedicated facility) is a big deal. It shows your business is growing and that things are really shifting into gear.
And your inventory software should be aligned with this too.
So if you’ve got your sights on a new warehouse or facility in the near future, it’s imperative you have a management tool that can handle everything.
11) The benefit of upgrading outweighs the cost
There are huge and obvious benefits to using genuine inventory management software over a simple inventory tracker tool or spreadsheet.
But this will always mean a heavier financial investment.
The key is being able to assess the inventory problems in your business. And make an informed decision on whether the benefits of solving them will outweigh the financial cost.
If that’s the case, then upgrading your inventory tracker should be a high priority. And Veeqo could be the ideal solution.
Written by Mike Glover
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- 11 Telltale Signs You’ve Outgrown Your Inventory Tracker - 7th June 2018